Reddit falls after Wells Fargo downgrades on Google's AI search worries, user decline

Wells Fargo downgrades social media platform Reddit RDDT.N to "equal weight" from "overweight", trims PT to $115 from $168

New PT implies ~1.6% upside to stock's previous close

RDDT's shares fall 6.3% to $106.04 premarket

Brokerage says Reddit's user base is likely to decline due to changes in search user behavior and Google's integration of AI search capabilities

Decline in logged-out users will also impact logged-in user growth and high-margin data licensing revenue, Wells Fargo says

Adds decline in user base will affect not only RDDT but also other companies that rely on search traffic

Reddit's data licensing business may be at risk due to increasing use of AI-powered search tools and co may need to prioritize internal monetization of its content and data to minimize long-term risk, Wells Fargo says

As of last close, RDDT stock down 30.7% YTD